When Yang Lihong discovered that the life savings he kept in his stove at home had been chewed up by mice, the bank was able to piece the notes together. However if the stove had been inadvertently lighted his notes would have been irreparably lost. After learning the hard way Mr. Lihong began keeping his savings in the bank. Savers who kept their money at the State Bank of India were not so fortunate when termites made dust of their notes.
Fortunately savers in America are protected by the Federal Deposit Insurance Corporation (FDIC) which insures bank deposits of up to $250,000 per depositor. Provided one seeks out a bank that is covered by FDIC and keeps no more than the maximum amount in an account, then banks are in fact the safest place to deposit ones money.
Similarly in the U.K. the Financial Services Protection Scheme insures deposits of up to £85,000 per person. Any savings above these levels should be spread out across different banks, ensuring that two separate banks are not linked as one entity.
Admittedly there isn’t the immediate convenience of simply reaching under the mattress to grab a stash of cash for spending, but the risk of losing it is well insured. Savers may once have traditionally chosen the mattress as a safe home for their cash but banks offer greater security plus interest on deposits.
Even with the tightest home security in place the risks of leaving cash under the mattress or other ingeniously well thought out hiding places around the home are dire. Not only is there the risk of burglaries to contend with but also the risks of fire and flooding, or avaricious family members helping themselves. Although home insurance may cover a small amount of cash there will be limits imposed on the amount and those who suffer loss will need to prove they had cash in the home.
Keeping ones savings in the home is a sure way for their value to decrease in real terms. Although interest rates may be at an all time low it is still possible to find bank accounts that offer reasonable interest rates. Consider switching to a current account that pays interest on balances to enjoy the highest returns, or seek out the top interest bearing savings accounts. It is worth scouring online accounts for the highest returns. It pays to always be on guard against rate changes and to be prepared to operate as a rate tart, chasing the best deals to keep one step ahead of the banks.
In the modern age keeping ones savings under the mattress is a foolhardy choice. It may appear as a more frugal option than paying bank fees, but it is perfectly easy to find bank accounts that operate without charge and very few people pay charges from necessity, but rather from complacency. It could be a difficult move for misers who like to feel the presence of their notes or coins, to abandon their savings to a bank. Nevertheless it is the safest choice to make.